Nickel

Powerhouse
Indonesia's unmatched ascent and the
implications for biodiversity, water, air
and people
February 2023
© Steven Brown 2023
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Within the next five
years, Indonesia will
have 4.5 million tonnes
of nickel production
capacity.

Current world demand is

only 3 million tonnes.
Table of
Contents
01 Introduction

02 Indonesia's significance

03 Environmental setting
Ultramafic rainforests

Freshwater ecosystems

Marine biodiversity

04 Environmental impacts
Impact assessment

Mine footprint in ultramafic forest

Indirect deforestation

Effectiveness of rehabilitation

Water quality impacts

Coastal impacts

Air emissions

05 Social impacts
Community health

Indigenous peoples

Cultural heritage

06 Governance
07 Recommendations
Introduction
As the world races to decarbonize, we now face the
hard reality that we must produce significantly more

14x
metal to enable the transition to an electrified future.
Nickel has emerged as one of the key metals for
energy storage and electric vehicles.

Today’s society expects greater sustainability

assurances than ever before. To be successful, electric
vehicle makers must demonstrate how they respond
to expectations of their environmental and social
performance, including in metals sourcing.

Indonesia has become the world’s biggest source of increase in

nickel, and is the only region that has seen any growth
in nickel supply in recent years. Yet, there is a generally Indonesian
poor understanding of how Indonesian nickel is mined
and processed, and what impact this has on the nickel
environment and local communities.
production
This paper aims to capture the current status of our
understanding of Indonesian nickel supply and its over last 8
impact on the environment and society. It also aims to
document knowledge gaps in our understanding. years
In doing so, it is hoped that actors in the nickel supply
chain will be better equipped to fill knowledge gaps
and improve the sustainability of nickel sourcing.

Nickel ore being loaded onto barges in Sulawesi

Indonesia's
significance
Indonesia has always been a There are credible plans in place to grow production
capacity to over 5 million tonnes Ni per year within
significant source of nickel, but it the next 3-5 years. This is an incredible feat,
is only in the last five years that it considering that total nickel demand today is only 3
million tonnes. New projects are being announced
has become such a titan of metal regularly, and development timelines are a fraction of
production. In 2014, Indonesia had those seen elsewhere around the world, meaning
there could be even more than the 5 million tonnes
two nickel smelters, producing capacity over this period.
100,000 t Ni per year. In 2022,
Other nickel producing regions such as Canada,
Indonesia produced 1,400,000 t Ni, Russia and Australia are struggling to invest enough
which was 50% of world supply. just to maintain their production levels.

Nickel production capacity

'000 t Ni per year

Indonesia Operating Construction Planning

Current global demand

Rest of world Operating

0 2,000 4,000 6,000

Source: Macquarie, December 2022

Rudimentary jetties are used to take ore from mines to the processing hubs

Typically, Indonesian ore production exceeds

demand, with excess ore stockpiled at processing

150
hubs. In 2021, Indonesia mined a record 100 million
tonnes of nickel ore.

Incredibly, in 2022, Indonesia beat that record by an

additional 50%, producing around 150 million tonnes.

The pace of growth has left mining companies

struggling to maintain good mining practices.
Environmental and social performance has suffered.
With a shortage of mining equipment, there has been
a tendency among some mining companies to million
prioritize production over rehabilitation.
tonnes of ore
Mine planning has also suffered. Many locations have
been mined without any water runoff controls, and mined in
some access roads have been constructed without
due care to avoid sensitive habitats. 2022
While regulator processes are in place to prevent such
issues, the large number of mining companies
applying for permits has placed an unsustainable
strain on government resources. Consequently, the
enforcement of regulation has been sporadic and
under-resourced.
Compliance and
enforcement

The enforcement of regulations in the Indonesian The Ministry of Environment and Forestry undertakes
nickel mining industry faces several challenges, which compliance audits through its PROPER program. Some
can limit the effectiveness of the regulatory framework of the larger nickel companies, such as Vale, Antam,
in promoting sustainable and responsible mining and Hengjaya, are included in the audits, and have
practices. The key challenge is the limited resources achieved a “green” rating, meaning they’ve gone
and capacity, with a severe shortage of trained beyond compliance. However, the majority of the
personnel to carry out inspections and investigations. Indonesian nickel operations are not included in the
This limitation stems from the unprecedented growth program, meaning that their compliance status is
of the industry, which has placed enormous strain on unknown.
the public sector.

In 2022, the Indonesian government announced that it

had revoked 2,065 permits covering more than 3.1
million hectares, due to non-compliance or because
they had not been used.
The pace of growth has
In December 2022, a court ordered a local
environmental agency in Sulawesi to publish the placed unprecedented
licensing documents of two nickel mining companies
that were accused of contaminating a river with strain on government
sediment. In a response the environmental agency
said it was unable to comply because some of the agencies
licenses were still being processed at the environment
ministry in Jakarta, while others would have to be
requested directly from the ministry instead of the
agency.
Knowledge summary
Indonesian nickel production

What we What we don't

know know
Indonesia is currently the world's Production data for individual mines.
only source of growth in nickel Footprint of key mining locations.
production. Traceability of nickel back to
Indonesian nickel is mined and then individual mine sites.
transported to processing hubs Company disclosures (very few
within Indonesia. companies produce public reports or
Majority of mining companies are even have websites).
Indonesian private- and state-owned
companies, while processing hubs

4%
are foreign-owned, mostly by
Chinese entities.
Production data for processing hubs
is well understood.
Estimated carbon emissions from
processing hubs is available.
Local environmental impact
assessments are not publicly
available and typically do not of Indonesian
adequately address key issues.
nickel
operators
prepare
public reports
The Sulawesi Hornbill is endemic to Sulawesi. It is a highly social
species, living in communities of about 20 individuals, where
only the dominant pair breeds. The female seals herself inside a
tree hole to lay her eggs, while the male and helpers provide
food for the female and the young.

Listed as vulnerable on the IUCN Red List of Threatened Species,

the species is under threat from habitat loss and fragmentation.
Environmental
setting
Indonesian nickel mining activities The anoa is the smallest of the wild cattle species. It is
listed as endangered, considered to be facing a very
occur in Sulawesi and the Maluku high risk of extinction in the wild, and is on the IUCN
Islands, in a region known as Red List of Threatened Species.

Wallacea.

Wallacea is named after famed naturalist, Alfred

Russel Wallace, who travelled through the region for a
period of eight years, starting in 1854.

Wallacea has been described as a living laboratory of

evolution. Millions of years of relative geographical
isolation have allowed fascinating and highly unique
fauna to evolve.
Anoa
Although the flora of Wallacea is not well known, it is
estimated that there are about 10,000 species of
The babirusa ("pig deer" in Indonesian), is an unusual
vascular plants. Roughly 1,500 of those species are
pig with long upper tusks that penetrate through the
endemic (found nowhere else).
skin of the upper lip. The population in their native
habitat is estimated to be less than 10,000, and is
Sulawesi is the largest island in Wallacea and is the
listed as Vulnerable on the IUCN Red List of
world's main source of nickel. It has the highest
Threatened Species.
number of mammals in Wallacea, of which an
incredible 90 % are endemic. It holds important
flagship species such as the anoa and the babirusa.

Babirusa

Despite its importance, there are still significant

knowledge gaps about the region's ecology and
culture. For example, there is a lack of data on the
distribution and abundance of many species, as well as
a lack of understanding of the complex relationships
between different species and their environment.
Additionally, there is limited information about the
traditional ecological knowledge and resource
management practices of the indigenous peoples of
the region. This lack of information makes it difficult to
effectively conserve and manage the unique and
Babirusa skull, as illustrated by Wallace in 1876
valuable resources of the Wallacea region.
 Wallacea
Located between the continental
shelves of Asia and Australia, Wallacea
is a region of immense ecological
importance

Source: see reference 1

Readers appreciate
accurate information
 Incredible Sulawesi

The Maleo is a critically endangered bird that The Sulawesi lined gliding lizard is endemic to Sulawesi
incubates its eggs using solar or geothermal and glides between trees using wing-like membranes
heat

The Sulawesi bear cuscus is the world's largest marsupial Sulawesi is home to some of the world's largest
possum and is listed as vulnerable pythons, like this one that was killed by a villager
just near IMIP

The Sulawesi Limnonectes is a giant frog with fang-like teeth. It is only

known species of frog that gives live birth to tadpoles

Camera-trap image of
the Sulawesi Giant
Civet: Sulawesi's
extremely rare apex
predator. The
scientific community
knows virtually
nothing of its habits
The Tarsier is one of the world's
and ecology.
smallest primates
In 2020, a research expedition found five new sunbird species and five
new subspecies from a small island just off the Sulawesi mainland, all
collected in a single 6-week expedition. This is remarkable, given that
globally there are generally only about five or six new bird species
discoveries per year. The research paper concluded that our
"understanding of biogeographically complex regions such as Wallacea
2
remains incomplete."
Ultramafic
rainforests
Wallacea is now a well- The ultramafic geology is the source of the nickel
laterites that are targeted by mining companies. This
documented biodiversity hotspot. geology contains high metals concentrations that
However, ecologists have largely inhibit plant growth, leading to exceptionally unique
biodiversity where species have adapted to the
overlooked Sulawesi in general, unusual conditions.
and especially where the mines are
With such high metals content, the ultramafic soils are
concentrated. generally unproductive and so are less preferred for
agriculture. This means that the ultramafic forests
Despite being the largest island in Wallacea and have been largely ignored by local populations. The
recognized as a globally important conservation area forests are somewhat uncharismatic, especially
across a range of evaluation criteria,3 data collection compared to other nearby alternatives that have
rates in Sulawesi are among the lowest in Indonesia garnered all the attention of research teams.
and taxonomic study has been limited. 4

Within Sulawesi, there can be significant differences in

ecosystems across the island. Sulawesi's unusual
Sulawesi's ultramafic
shape, with four narrow branches in the shape of the rainforests are highly
letter K, results in isolated peninsulas. Despite its large
area (179,380 square kilometers), no location is more unusual, yet remain largely
than 100 km from the coast.
unexplored by the scientific
All the mining activity is confined to a specific type of
forest, known as ultramafic forests.
community
Biodiversity of
ultramafic forests

From the little research available, we know that these This geographic bias in collection history directly
ultramafic forests are remarkably distinct. Yet, we have affects the observed species diversity measures, as
poor knowledge of species and abundance, due to the collection density by biogeographic region has a linear
low numbers of collections undertaken, especially in relationship with number of unique species observed.
the Morowali and Konawe mining regions that are the Consequently, the mining activities around Morowali
primary sources of nickel today. Most collections have and Konawe could be impacting on countless numbers
occurred in the North Sulawesi arm and around the of unknown species.
Malili Lakes.

Collection density map of Sulawesi Correlation between number of

collections and number of species
Number of species

Number of collections

Collections by regency

The area most impacted

by nickel mining is also
the area with the least
Main nickel mining area
known about its
biodiversity
Source: Cannon, Summers, Harting, and Kessler,4
Freshwater
ecosystems
5
Freshwater biodiversity studies in the Indonesian In contrast, little is known of the riverine environments
ultramafic forests have focused on the exploration of in the Indonesian ultramafic forests. Unlike most other
species diversity and evolutionary biology in Sulawesi. larger Indonesian islands, Sulawesi does not have
Endemic species include gastropods, crustaceans and many large, slow-flowing rivers. Instead, Sulawesi’s
fishes. Most of the research has focused on Sulawesi’s riverine environments consist of small catchments
lakes, especially the ancient lakes, which are some of with medium to high stream velocity.
the world’s oldest lake environments.
One recent study found that riverine species in
The Malili Lakes system (adjacent to the Vale Sorowako Sulawesi can be deeply divergent, even within a single
6
nickel mine and smelter) is known for its endemic river system. This suggest that further studies of
species flock of sailfin silversides (Telmatherinidae), Sulawesi’s rivers could reveal species richness similar
and radiations of ricefishes (Oryzias) and gobies. The to the lakes.
lakes are also known for their remarkable clarity.

Lake Matano is one of the deepest lakes in the world,

and yet it is only 34 kilometers from the coast. Its
surface is at an elevation of 382 meters above sea
level, while its deepest point is over 200 meters below
sea level.

Lake Matano is known for its remarkable clarity and its numerous endemic species
Coastal and marine
biodiversity

Indonesia's nickel mining operations lie in the heart of

the coral triangle - the epicenter of marine biodiversity,
spread across six countries: Indonesia, Malaysia,
Papua New Guinea, the Philippines, the Solomon
The Gag Nickel project
Islands and Timor-Leste. It represents 30% of the
world's coral reefs, despite occupying just 1.5% of the
site covers the entire
7
world's total ocean area.
area of Gag Island,
Over three quarters of the world’s coral species are
found here. Fifteen of the coral species are endemic to
located in Raja Ampat –
the region.
a proposed UNESCO
Little is known of the status of the coral reefs that
fridge the nickel mining areas. Satellite imagery shows
World Heritage site
extensive coral reefs in all the key nickel mining
regions in Indonesia. While some companies have
renowned for its marine
undertaken marine baseline studies prior to
commencement of operations, these have been rare
biodiversity.
exceptions rather than commonplace.

Only a tiny fraction of Indonesian nickel operations conduct

proper baseline studies of the marine environment
The Lasolo Bay Nature Park is located directly
offshore from one of Indonesia's major nickel
mining regions
The coelacanth, known to local fishermen as “raja laut” (“king of the seas”)

Sulawesi's living fossil

The coelacanth was once believed to be extinct, with only fossils remaining from
approximately 65 million years ago when the dinosaurs disappeared during the great
extinction. However, in 1938, a living coelacanth was discovered off the coast of Africa,
leading to the discovery of a community near the Comoros Islands between Madagascar
and Mozambique.

The scientific community was once again stunned in 1998 when UC Berkeley researchers
announced the discovery of a coelacanth in Sulawesi, Indonesia, located nearly 10,000
kilometers from the Comoros. Despite its resemblance to the Indian Ocean population,
DNA analysis of tissue samples from the Indonesian specimens revealed genetic
differentiation. Studies have suggested that the two populations have been separated for
millions of years, leading to the description of the Indonesian form as a new species,
Latimeria menadoensis, in April 1999.

Coelacanths can reach lengths of over six feet and weigh up to 200 pounds, covered in
thick, scaly armor. They are estimated to live for 60 years or more. One striking feature of
these fish is their four fleshy fins, which extend away from the body and move in an
alternating pattern, resembling the movement of the forelegs and hind legs of a tetrapod
walking on land.
Knowledge summary
Environmental setting

What we What we don't

know know
Wallacea is one the most significant Limited research has been
biodiversity hotspots in the world. undertaken on the biodiversity of
Ultramafic forests are an important ultramafic forests, especially in the
part of the Wallacea ecoregion. most important mining areas around
Ultramafic soils are unique, leading Morowali and Konawe.
to highly adapted flora species. Freshwater biodiversity, especially in
Limited research has been rivers, has not been well researched.
undertaken in ultramafic forests, but The extent and status of coral reefs
research studies can often yield around the mining areas is largely
many new species discoveries. unknown.
Significant research has occurred in The significance of the ultramafic
Sulawesi’s ancient lakes, with forests, including the
numerous endemic species interconnectivity with the broader
discovered. Wallacea ecoregion, is not
Riverine biodiversity varies understood.
significantly across the region, with
significance species divergence
possible within a single river.
Coral reefs of global significance exist
around the mining areas.
Environmental
impacts

Given the importance of the environmental setting outlined

above, understanding the impact of nickel production in Indonesia
is crucial.

Lateritic nickel operations impact the environment in several ways. The

physical footprint of the operations displaces and fragments habitats.
This can be partially offset by mine rehabilitation activities where these
are undertaken. Water runoff introduces chemical and physical
stressors that can threaten ecosystem health in rivers and coastlines.
Air emissions affect local air quality and contribute to climate change.
Infrastructure can also provide access to areas that were previously
isolated from human activities, leading to secondary impacts such as
forest conversion for agriculture and poaching.
Impact assessments

All mining developments in Indonesia must have an impacts let alone determine appriate management
environmental and social impact assessment (EIA) plans.
prior to commencement. If done well, the EIA will
include a thorough baseline study of environmental Moreover, there is little genuine effort to consider
conditions at the site, identify sensitive habitats and cumulative impact of the combined mining activities in
communities, quantify impacts, and determine the region. Most EIAs define a study boundary around
appropriate impact management and monitoring their individual mines, but there has been no
plans. consideration of the broader impacts to the ultramafic
forests in which all the Indonesian nickel mines are
The degree to which nickel mining EIAs achieve this located.
coverage varies significantly. The EIAs are reviewed
and approved by the government, but only the larger
developments require central government review by
Given the scale of the nickel
the Ministry of Environment and Forestry. The vast
majority are reviewed at the local level, where capacity
activities, with more than half
to deal with the huge numbers of nickel mines is low. the world production occurring
EIA review meetings are led by the Government, but in a concentrated environment, a
include community and NGO representatives. The
large review panels mean that there is not enough landscape-scale assessment is
time to adequately discuss genuine project issues, and
instead digress into debates over individual
warranted.
grievances, mostly around fair distribution of
employment opportunities between the nearby The site-by-site approach that is currently employed is
villages. not fit-for-purpose and risks missing the far-reaching
and long-term impacts that may arise.
Consequently, most EIAs fail to properly document
baseline biodiversity and fail to quantify actual project
 Positive Net
gain

Environmental Residual Residual Residual

Offset
impact impact impact impact

No net
loss
Net impact

Restore Restore

Minimize Minimize Minimize

Avoid Avoid Avoid Avoid

Negative

Mitigation hierarchy
In many jurisdictions, mining operators must mitigate
environmental impacts by following a mitigation hierarchy.
The mitigation hierarchy is a widely used requirement to limit
the negative environmental impacts of mining projects.
Indonesia does
The sequential steps in the hierarchy are to avoid and then
minimize any negative impacts, and then restore sites no not require use
of the mitigation
longer used by a project, before finally offsetting any residual
impacts.

Many jurisdictions require “no net loss” or sometimes even hierarchy and
“net gain” in biodiversity.

Indonesia does not require the use of this mitigation

does not require
hierarchy, and does not have any requirement for “no net
loss” or “net gain”. Instead, Indonesian mining operations are
"no net loss" of
merely required to “minimize” significant negative impacts by
implementing management plans. This is a significant biodiversity
difference in the requirements applied to mining activities in
Indonesia compared to many other jurisdictions.

Other nickel-producing countries, such as Canada and

Australia, require no net loss, except in specific circumstances
where partial offsets are allowed.
Mine footprint in
ultramafic forests
Indonesia’s nickel operations are
located exclusively within ultramafic
forests.

36%
There are 313 nickel mining exploration and
production licenses in Indonesia, covering a total of
825,000 ha. This represents a significant percentage of
Indonesian ultramafic forest land. The area of
ultramafic forest in Sulawesi is estimated to be about
1,500,000 ha, of which 36% is covered by nickel mining
licenses.

Only a fraction of the license areas are actively mined of Sulawesi's

at any one time. As mining progresses, companies are
supposed to rehabilitate mined out areas before new ultramafic
areas are accessed. However, no data exists on the
amount of exposed mining area over time. The local forest is
authorities do not cap total land exposure, although
some of the larger mines have site-based caps covered by
imposed.
nickel mining
licenses
Globally, nickel has a higher proportion of
production in extreme and high risk areas
for biodiversity

Extreme High Medium Low

100%

75%

50%

25%

0%
l

ite

al

ad

nc

er

al
ke

or
ol
co

co
pp
Zi
ux

Le
ic

n
N

al

et
Co
Ba

Iro
m

M
er
Th

Source: Maplecroft , 2021

A recent study by Maplecroft found that nickel is the

mined commodity most exposed to biodiversity risks,
mainly because of huge nickel operations in
biodiverse areas such as Indonesia, New Caledonia
and the Philippines. The report also found that
Indonesia had the highest risk of all major
commodity producers.
Appropriate buffer
zones

Indonesia has mandatory buffer zones around specific Furthermore, the enforcement of these buffer zone
landforms, which limits how close mining activities can rules is sporadic. While some companies incorporate
be carried out. For example, mining activities in coastal the buffer zone requirements into their mine plans, a
areas cannot be carried out within 100 meters of the large number of other companies are either unaware
high tide mark. Similar limitations exist for rivers and of, or disregard, the requirements.
lakes.

Unfortunately, the definitions for rivers and lakes are

unclear, leading to confusion about buffer zones
around smaller water bodies and streams. Buffer zone
There is little information available about the requirements
effectiveness of these buffer zones in nickel mining
regions. Some individual mine EIA documents have are often
used empirical calculations to set distances between
mines and receptors, but there are no requirements ignored
for post-approval monitoring to determine the
effectiveness of these buffers.

Many nickel mines operate without applying any buffer zone

between mine and coastline
Indirect deforestation

Historically, Indonesia’s ultramafic forests remained

relatively untouched from agricultural conversion. This
Plantations in buffer zone
was because of the low productivity of ultramafic soils,
small populations in these areas and lack of Lake
infrastructure.

With the rapid expansion of nickel mining activities,

the ultramafic forests have now come under
significant pressure, with large areas being converted
for agriculture since 2010.

The nickel mining infrastructure, including jetties, Mine

roads and bridges, have opened up previously
inaccessible forest land. Population growth, caused by
the mining activities, has also incentivized forest
conversion. Satellite image showing how mine
infrastructure enables conversion of
No data is available on the rate of deforestation in the forest to agricultural land. In this case,
ultramafic forests. Further work is needed to an area allocated as a buffer zone has
understand how the mining activities directly and
been converted to plantations.
indirectly contribute to deforestation.

The cumulative effects of the indirect deforestation

and the nickel production activities have also not been
assessed.
Effectiveness of
rehabilitation

Lateritic nickel mines are shallow and can be Satellite imagery also suggests that many companies
rehabilitated to secondary forest without a major do not undertake any mine site rehabilitation. Many
change in landform. Almost all Indonesian nickel nickel mines have been left open for many years
mines are located in areas that are zoned as forest without any effort to restore vegetation cover. No
zones, meaning that by law they must be rehabilitated studies have been undertaken to measure
to restore forest cover. rehabilitation efforts across the industry.

Re-establishing tree coverage is challenging due to the

poor soil conditions. If topsoil is not preserved prior to
mining, it can be difficult to re-establish any vegetation Many mines are abandoned without any effort to
cover. However, with adequate will and effort, tree revegetate
cover can be re-established.

Many, but not all, mining companies do a good job of

revegetating the mined-out pits. On those mines that
undertake rehabilitation, a mix of local and introduced
plant species are used. With adequate care, trees can
be properly established within three years of mining.

Mining companies must monitor tree growth and

success rates to the government, but are not required Significant further work is needed to determine the
to monitor broader biodiversity indicators. effectiveness of current rehabilitation requirements
and enforcement mechanisms. With advancements in
Consequently, there are no data available to indicate if the use of drone technology, it should be possible for
the rehabilitation practices are leading to a return of the processing hubs to regularly monitor their ore
biodiversity to the post-mining landscape. The use of suppliers to ensure that adequate rehabilitation is
both native and introduced plant species in being undertaken. This could easily be incorporated as
rehabilitation has not been assessed in terms of its a requirement for all ore suppliers.
long term effect on biodiversity. A recent study in
Europe found that rehabilitation using non-native
9
species had negative consequences for biodiversity.
Water quality impacts

The main source of impact from lateritic nickel The Indonesian regulatory limits for sediment and
operations on freshwater quality is runoff from mining metals require further scrutiny. Indonesia water
areas. In the wet tropics, it is not possible to retain standards have been adopted from European and
runoff from operational areas for recycling or North American requirements, and adjusted to take
evaporation. Consequently, there is generally a into consideration the cost of compliance. European
continuous discharge of runoff water to the nearby and North American water quality standards have
streams and rivers. been developed based on toxicity studies in these
areas. The toxicity of metals in tropical Southeast Asia
This runoff water contains potentially harmful may be different to that in colder climates.
stressors, including sediments and metals.
Responsible operators use sediment ponds to reduce
the sediment loads prior to discharge, and may also
use some chemical treatment for specific metals.
These methods have been successful in meeting local
8
regulatory requirements. However, enforcement of
these requirements remains weak.

To address this knowledge gap, NiPERA Inc (the Nickel

Institute's independently-incorporated science
division) has undertaken a large number of studies
over the last decade to develop an approach that
would allow interested parties (government
authorities, companies, etc.) to assess risk of nickel
exposure in tropical environments. However, this
approach has not yet been used by Indonesian
authorities to assess adequacy of current limits on
nickel toxicity.

While the NiPERA approach is available to address

nickel toxicity risk, there are no tools available for
other metals that are present in laterite mine runoff.
Chromium is of particular concern, given its presence
in the laterite profile and known potential to oxidize to
the highly toxic hexavalent chromium form. At least
half of Indonesia’s nickel mines generate hexavalent
chromium at concentrations above the Indonesian
regulatory limit. Some of the more advanced
companies treat the hexavalent chromium, bringing it
back within the allowed regulatory limit. However, no
Indonesian regulations require monthly samples to be research has been undertaken to determine if this
measured for sediment and metals content. Monthly limit is appropriate in the tropical ultramafic
sampling is not sufficient to adequately monitor the environment.
high variability of sediment and metals concentrations
in tropical laterite mines. Typically, the monthly To address these issues, it is necessary to
samples are collected in dry conditions, which systematically assess scales of risk of aquatic toxicity. It
correlate to the lowest concentrations. This means is likely that lateritic nickel mining causes impacts, but
that monitoring data does not account for peak it is unclear if these impacts are restricted to the local
sediment and metals concentrations. scale or if they are more widespread.
Coastal impacts

Indonesia’s laterite operations impact the coastal Indonesia’s first HPAL plants began operating in 2021.
environment in four main ways: Unlike the older NPI smelters, the HPAL plants use acid
to leach the nickel from the ore, and produce a tailings
Sediment loads directly from coastal mines or slurry. The tailings can be dried and stacked or
transported via rivers and streams. deposited into tailings dams. The remaining liquid
Effluent discharge from HPAL plants. effluent from the tailings is discharged to the sea via
Cooling water intake and discharge from coal fired pipelines.
power plants.
Reef and beach damage from jetty construction. The effluent contains dissolved salts and metals, which
can affect seawater quality. No toxicity studies have
Sediment deposition along the coast is the most been undertaken to determine the acute and chronic
visually striking impact of Indonesia’s nickel toxicity of HPAL effluent in the tropical marine
operations. First time visitors to major nickel hubs are environment.
often struck by the red color of the sea. These
sediments smother the coral and seagrasses, and have
drastic changes on the coastal ecosystems.
Indonesia’s nickel processing hubs are almost entirely
powered by coal fired power plants. These plants use
“once-through” seawater cooling, where seawater is
sucked in and cycles through the system to condense
the steam, then is discharged back into the sea. This
system is the cheapest cooling system to operate
because it is more efficient than alternatives and does
not require the additional infrastructure of cooling
towers.

In tropical Indonesia, the seawater temperature is

constantly high, meaning that very large quantities of
cooling water are required. The discharged seawater
can be significantly higher than the natural
temperatures, which affects marine life. Studies in
other regions have shown that this can negatively
impact the fishing industry. No studies have been
undertaken to determine impacts in the Indonesian
nickel producing regions.

Most Indonesian nickel mines use crudely constructed

jetties to transfer ore to barges to be taken to
processing hubs. These jetties are often constructed
directly onto the coral reefs. The in-fill construction
method carries the risk of coastal erosion, reducing
the resilience of natural beaches from storm surges
and sea level rise. The perpendicular positioning of
jetties to the shore disturbs naturally occurring
longshore drift and causes down-drift erosion.

Indonesian port regulations are highly restrictive. To

avoid onerous permitting requirements, most nickel
mines operate their jetties under the simplest form of
terminal permit. Unfortunately, this type of permit
does not allow different companies to share the use of
the jetty, meaning that each individual nickel operator
has to construct its own jetty. This leads to a much Jetty sharing is not permitted, so each
larger scale of impact than necessary. mine must construct its own

Overall, the cumulative coastal impacts of the

Indonesian nickel industry are not well-understood.
Much work is needed to understand how the impacts
described above are affecting key marine receptors.
Air emissions

Air quality is affected by dust from mining operations other emissions, such as particulates and SO2 are not
and air emissions from processing hubs. These well documented.
emissions include carbon emissions, but also other
pollutants, especially particulates and sulfur dioxide Nickel mining and especially nickel smelting operations
(SO2). produce significant amounts of particulates. This
occurs from mines and haul roads, stack emissions
The carbon footprint of Indonesia’s nickel operations and fugitive emissions. Indonesian smelters typically
have been estimated to be up to 60 tonnes of carbon use electrostatic precipitators to reduce the particulate
dioxide equivalent per tonne of nickel produced (scope emissions from stacks. This is effective in meeting
1 and 2). This estimate applies to NPI and matte stack emission requirements.
production using coal-fired power. For HPAL plants,
the carbon emissions can be up to 20 tonnes of carbon SO2 emissions occur from the burning of sulfur-
dioxide equivalent per tonne of nickel produced. This containing coal, and from the introduction of
is lower than NPI and matte emissions due to the elemental sulfur to produce nickel matte. Many
much lower energy demand. Indonesian plants do not use scrubbers to reduce SO2
emissions, and instead try to control emissions by
Combined, the carbon emissions from Indonesian NPI selecting low-sulfur coal and by being more efficient in
and matte in 2022 production would be in the order of sulfur injection to the matte. Indonesia’s new matte
70 million tonnes of carbon dioxide equivalent. plants achieve low sulfur emissions, but Vale’s older
generation matte plant in Sorowako is one of the
With the global focus on climate change, the carbon world’s largest sources of SO2.
emissions are relatively well understood. However,
By comparison, companies such as Vale and Glencore
have invested billions into SO2 emission controls in
North America in recent years.

The overall impacts to air quality are not well

understood. This is due to gaps in regulatory
requirements. While stack emissions are well-
regulated, the requirements for non-point sources
such as mines and fugitive plant emissions are unclear
and poorly implemented. Few operations, if any,
mitigate and monitor non-stack emissions.

Although Indonesian stack emission requirements are

clear, potential errors are introduced through the
monitoring practices. Indonesian plants must use
accredited laboratories to measure stack emissions Modern laterite smelters use ESPs to capture
against regulatory requirements. The accredited particulate emissions from stacks. However,
laboratory in Sulawesi (where the nickel operations are these smelters also have numerous fugitive
located) has had issues in properly measuring emission sources, which are not well
emissions, leading to under-reporting of emission regulated at present.
concentrations. This has led to high emissions being
reported as compliant, even though internal company
measurements indicating that the emissions were
actually above regulatory limits.

There is also a significant gap in ambient air quality

monitoring around the nickel operations. Only one site
has a continuous ambient SO2 monitoring station. No
other locations have continuous air quality monitoring.

Without continuous air quality

monitoring stations, there is
no useful information on the
effects of the nickel industry
Local laboratories often struggle with on local air quality.
accurately measuring smelter emissions,
resulting in under-estimating the SO2
emissions
Knowledge summary
Environmental impacts

What we What we don't

know know
Around 36% of Sulawesi’s ultramafic Most impact assessments do not
forest is covered by nickel mining adequately assess impacts and
licenses. mitigations.
Mine infrastructure provides access Net impacts are not quantified, as
to remote forests, leading to there is no requirement to achieve
additional deforestation around “no net loss”.
mine sites. The adequacy of the buffer zone
Mine water runoff contains requirements has not been assessed.
potentially toxic pollutants, including The ability of current rehabilitation
hexavalent chromium. practices to regenerate biodiversity
Indonesian nickel mines are only loss is unknown.
required to collect monthly water The toxicity of mine runoff in tropical
samples for sediment and metals environments is unknown.
concentrations. The impact of sediment runoff and
Fugitive emissions and other non- HPAL effluent on coral reefs and the
point air emission sources are not marine environment have not been
well regulated in Indonesia. assessed.
Continuous air quality data is not
available.
Social impacts

Indonesia’s nickel industry delivers significant

economic and social benefits to the nickel producing

2022 Ni
regions and the nation as a whole. Nickel exports
(including stainless steel) were over $30 billion in 2022,
representing 10.5% of total exports. In Sulawesi and

export
Maluku, nickel mining alone accounts for between 23
and 41% of the regional GDP and represents close to
10
20% of all paying jobs.

The rapid growth in nickel production also carries

social and cultural risks. These include risks to:
revenues

$30b
community health;
indigenous peoples; and
cultural heritage.

While this paper elaborates on each of these risks, this

should not detract from the significant social and
economic benefits of the industry. Even those
community members who participate in
demonstrations against nickel operations typically
support the overall presence of companies, although
they may disagree with specific issues (for example,
recruitment processes).
In focus: Morowali
Morowali is a regency in Morowali regional GDP
Sulawesi, and is Indonesia's
largest producer of nickel. In the
last 10 years, the regency has
2011
been transformed from a quiet
undeveloped collection of
fishing villages to a major driver
of the Indonesian economy.
2021

0 20 40 60
Trillion IDR

The nickel industry has brought

about major changes to the lives
of the local community through
significant investments in long-
term improvements to the
region. These include
improvements in public
infrastructure, education,
recreational facilities, and
cultural well-being.

Nickel companies have played a

crucial role in supporting the
local community during recent
disasters. The companies have
provided financial assistance
and resources to help with
recovery efforts and have
worked closely with local
government to provide aid such
as food, shelter, and medical
supplies.
Community health
The laterite nickel operations can impact community Water quality impacts present an even bigger risk to
health through poor air quality and poor water quality. human health. The risk of exposure to hexavalent
As outlined in the section on environmental impacts, chromium from mine runoff is a serious concern with
the nickel operations can impact air quality through potential for significant human health consequences.
particulate and sulfur dioxide (SO2) emissions.

Particulates are inhalable particles that are small

enough to penetrate the thoracic
region of the respiratory system. The health effects of
inhalable particulate matter are well documented.
These include respiratory and cardiovascular
morbidity, such as aggravation of asthma, respiratory
symptoms and an increase in hospital admissions, and
also mortality from cardiovascular and respiratory
diseases and from lung cancer.

Hexavalent chromium (Cr6+) is generated in the runoff

from around half of Indonesia’s nickel mines. It is a
highly toxic chemical and carcinogen. Ingestion of Cr6+
through drinking water has been found to cause
cancer in the oral cavity and small intestine. It rose to
fame as the contaminant behind the Erin Brockovich
case, which later went on to become a major cinema
production starring Julia Roberts.

No risk assessments or studies have been undertaken

to quantify Cr6+ exposure risks in Indonesian nickel
operations.

The particle size and chemical composition of the Without reliable water quality monitoring data (see
particulate matter can influence the degree to which section on water quality impacts), it is not known how
these health risks are presented. The specific risks many people could be exposed to toxic levels of Cr6+.
relating to particulate matter found in the nickel
producing regions of Indonesia have not been studied. Another potential heavy metals exposure pathway is
via consumption of seafood. The coastal impacts of
Sulfur dioxide also affects the respiratory system, the nickel operations may lead to elevated metals
particularly lung function, and can irritate the eyes. It concentrations in fish and other seafoods, which in
can irritate the respiratory tract and increases the risk turn can be consumed by the local people. No risk
of tract infections. It causes coughing, mucus secretion assessments have been undertaken to evaluate this
and aggravates conditions such as asthma and chronic potential exposure.
bronchitis. The elderly and children are more
susceptible to these risks.

One study around the Sorowako operation found that

"some health conditions typical of exposure to
airborne particulates and nickel, such as asthma,
rhinitis, and skin tumours, were more prevalent in
areas closer to and downwind from nickel mining and
smelting compared to Malili, a community located
further away from the mines and smelter." 11
Indigenous peoples
A discussion on indigenous peoples around the nickel One of the major processing hubsis located close to
mining regions of Indonesia is complicated by the lack lands thought to be part of the realm occupied by one
of official recognition of indigenous status for rural of Indonesia’s last nomadic tribes – the Tobelo forest
communities, which have been classed instead as community. These people live in the rainforest without
“remote”, but given no recognition in terms of their permanent settlements, and are mostly disconnected
ties to territory. from the rest of Indonesian society. Although total
numbers are hard to determine, knowledgeable
Currently there are four indigenous peoples groups sources estimate the nomadic community to be a total
that are acknowledged by the Indonesian government of 100 individuals.
in nickel mining areas. These are located at Sorowako
(near the Vale operation), Hukae Laea-Moronene
(close to the Southeast Sulawesi mining areas),
Bahomotefe (near the IMIP processing hub), and the
Fritu people (close to the IWIP processing hub).

The nickel mining activities pose risks to indigenous

populations by displacing them from traditional lands
and by diluting the population. Local populations are
insufficient to support the required workforce
numbers. This has led to large numbers of Indonesian
nationals internally migrating to these regions. This
poses risks that indigenous beliefs and customs will be
diluted and lost.

A member of the nomadic Tobelo forest

community, photographed in 2019

More broadly in the community, the influx of workers,

both domestic and foreign, has led to significant
cultural changes in the community. The impact on
vulnerable segments of the population has not been
assessed. In particular, there is a need to consider
women's rights and health, given the influx of a largely
male workforce.

Little is known of the local population at

Sorowako before mining activities began

Some of Indonesia’s earlier mining operations were

developed decades ago, in an era when companies did
not document indigenous people groups like they do
today. Yet even today, many mining companies
proceed with development with little thought to
understanding indigenous peoples ties to the land in
which the mines are located.
In January 2023, a conflict between local and
Ancestral land ties can be particularly difficult to notice foreign workers broke out at a major
in the nickel mining regions. As laterite soils are processing hub, leading to the death of two
especially unproductive, the land can be left fallow for workers.
decades before families return to the area.
Cultural heritage

There is little information available about cultural

heritage in Indonesia's nickel mining areas. These
areas have, until now, been sparsely populated and
attracted little interest prior to the rush on nickel.
Typical EIAs do not undertake proper cultural heritage
assessments, especially among the smaller companies.

Many of the karst areas surrounding nickel mines have

potential cultural heritage value. Some of these caves
have harbored ancient artwork, while others have high
tourism value.

Indonesian regulations
have focused on physical
artifacts, while intangible
cultural heritage has often
been overlooked.
Aside from some of the larger nickel developments at
Weda Bay and the Sulawesi Cahaya Mineral site, very Bokimoruru Cave, near a major nickel
little work has been done to understand cultural project, has cultural value potential
heritage in the nickel mining areas.

This painting of
the endemic
Anoa, discovered
in a cave in
Sulawesi, is
believed to be
one of the oldest
surviving
artworks in the
world, dating
back 44,000
years
Knowledge summary
Social impacts

What we What we don't

know know
Indonesia's nickel industry provides The health effects of air emissions
significant economic and social from laterite nickel mining and
benefits. processing have not been well
Local communities are generally studied.
highly supportive of the nickel The potential for serious health
developments. effects from hexavalent chromium in
Nickel mine runoff can contain nickel mine runoff has not been
hexavalent chromium, a known assessed.
carcinogen. Impacts of nickel activities on
There are several known indigenous indigenous peoples have not been
groups around the Indonesian nickel systematically assessed.
mining areas. Cultural heritage impacts have not
been adequately evaluated at most
mine sites.

Health effects on local communities have not been well studied

Governance
Although a full review of governance is beyond the For example, Indonesian nickel mines may not be able
scope of this paper, there are several known to demonstrate no net loss of biodiversity
knowledge gaps in governance practices in Indonesia’s (requirement 4.6.4.1.), and may not be able to
nickel industry. The industry is characterized by low implement offsets in line with international best
levels of transparency. Consequently, little is known of practice (requirement 4.6.4.3.). This is because
governance mechanisms outside the two main publicly Indonesian mining companies do not have sufficient
listed companies, Vale and Antam. baseline biodiversity data, and thus it would be
impossible for them to demonstrate no net loss.
Few Indonesian nickel operators provide any
information about anti-corruption policies. The current It may require several years for even the more
Indonesian government has made major strides to advanced Indonesian producers to meet these
reduce corruption. Still, corruption remains an area of requirements.
concern, especially in the nickel sector where only a
small number of publicly listed companies are active.

With the low levels of transparency, there remains Even Indonesia's

most responsible
significant barriers to achieving traceability of nickel
back to individual mining operations. While blockchain

operators will
has started to be used in other commodities to trace
metal through the supply chain, it has not yet been

require several
used to trace Indonesian nickel.

years to comply
To support responsible sourcing, electric vehicle
producers are using supply chain due diligence tools

with IRMA
such as the Initiative for Responsible Mining Assurance
(IRMA) standard. The Indonesian nickel industry will
face significant challenges in meeting the
requirements of the IRMA standard.
Recommendations
Organizations throughout the nickel supply chain Recommendations for processing companies
should play a greater role in the stewardship of within Indonesia
lateritic nickel.
Recognize the challenge for small mining
As a general recommendation, it is important that companies in meeting market expectations on ESG
other sources of nickel outside of Indonesia are performance. Provide support to ore suppliers to
developed. Diversity of supply is important to reduce build capacity.
dependence on one source, and to reduce potential Provide clear expectations to suppliers on
environmental and social impacts. Consideration appropriate ESG standards, such as IRMA, TSM or
should be given to seabed polymetallic nodules, which the Joint Due Diligence Standard for Copper, Lead,
could provide a viable source of nickel with potentially Nickel and Zinc.
far lower impact to the environment and society. Undertake appropriate supply chain due diligence,
including monitoring and auditing of ore suppliers.
This report highlights several noteworthy concerns, Coordinate with other processing companies to
however, it should not be interpreted as a call to halt align on standards to avoid duplication.
Indonesian nickel developments. The world needs Invest in training programs to share knowledge
Indonesian nickel, and there are potential solutions to with ore suppliers.
all issues outlined in this report. Engage with downstream customers and markets
to develop appropriate supply chain requirements.
Recommendations for laterite mining companies Engage with the Indonesian Government to ensure
appropriate requirements are regulated, and that
The most important step for mining companies is to tools, such as those provided by NiPERA, are
implement a recognized global ESG framework, such utilized.
as IRMA or TSM. These frameworks provide
comprehensive tools that will address many of the key Recommendations for manufacturers and markets
issues raised in this report. Additionally, mining
companies should: Communicate extensively with suppliers based in
Indonesia to ensure they are familiar with
Collaborate with customers to increase manufacturers’ and markets’ expectations, values
transparency and public knowledge sharing of the and priorities.
potential effects of laterite nickel mining. Audit supply chains, and invest in appropriate
Openly and transparently share gathered remote sensing tools such as drones to monitor
environmental baseline data, EIA documents, mine performance.
monitoring data and company ESG performance. Invest in appropriate studies to address knowledge
Engage with customers to develop workable due gaps, including those identified in this paper.
diligence frameworks for laterite nickel. Review due diligence frameworks to identify
Invest in capacity building to understand appropriate frameworks for laterite nickel,
stakeholder expectations and best practice. understanding the constraints in place for smaller
ore suppliers.
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Note: This report includes various assertions without accompanying references. These assertions are rooted in
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Never before has
mining on this scale
occurred in such a
unique and rare
environment

Author
Steven Brown
Responsible mining and metals specialist

Acknowledgements
We would like to thank the many leading academic,
industry, NGO and government experts who provided
invaluable perspectives to the paper, some of whom are
listed below:

Marcy Summers - Director of the Alliance for Tompotika

Conservation
Charles Cannon - Director, Center for Tree Science, USA
Chris Schlekat - Executive Director, NiPERA Inc.
Jim Lennon - Senior Commodities Consultant, Macquarie
Andrew Digges - Partner at Norton Rose Fulbright LLP